BKH is an energy & communications company consisting of three business units: regulated energy, independent energy and communications. For the 3 months ended 3/31/01, revenues totalled $566.4M, up from $248M. Net Income applicable to Common totalled $32M, up from $9M. Results reflect increased Independent Energy group revenue & higher average gas prices & oil volumes. Net income also reflects increased natural gas marketing & wholesale electric sales.

May 20, 2001

The well-publicized California energy crisis and President Bush’s energy plan have been very good for many utilities. Black Hills Corporation is a utility that primarily serves customers in South Dakota, Wyoming and Montana. However, the company does sell electricity throughout the western US. Earlier this month, BKH reported record profits of $1.37/share, which was an increase of 226% over the same quarter last year. The stock has been moving higher ever since the earnings report and on Friday the stock established a new high of $56.23. The strong share price may encourage the board to reward shareholders with a split. In the meantime, momentum traders might want to jump on this stock if it can establish yet another new high by trading above $56.23. This trade might be more attractive if the move is accompanied by midday volume exceeding 90,000 shares. The technical picture is improving. The MACD issued a buy signal last week and the Money Flow and the OBV are both moving higher off their lows. The RSI is indicating an overbought condition. However the last time the RSI was at a similar level, the stock kept rallying and the overbought condition became more pronounced. Initial support can be found at $54.00 followed by more support at the 20-DMA of $52.31. We are placing out initial stop at $52.25 to protect against a reversal.

Picked on May 20th @ $55.94
Change since picked +0.00
Stop Loss @ $52.25

May 31, 2001

BKH - Black Hills Corporation $54.90 -0.46 (-2.37)

Despite the drop below the important support provided by the 10-DMA of $56.72, there is still a lot to like about this western US utility. The company is expected to post record profits this year, due, in part, to the energy crisis. Couple this fact with the possibility that the company will announce a split soon and one can see why the stock is trading just under its 52-week high of $58.50. BKH has split its shares three times since 1986 and every previous split was announced when the stock was trading at levels below today's closing price. That said, traders will probably want to make sure that the stock can stay above the next level of support, which is provided by the 20-DMA of $54.69. The MACD did issue a sell signal yesterday, which is a bit of a concern in the short term.

Picked on May 20th @ $55.94
Change since picked -1.04
Stop Loss @ $52.25

May 29, 2001

Most all the sector indices closed lower today, including the utility stocks. The Dow Jones Utility Index (UTIL) slipped 2.25 to 387.82. The mild decline in utilities knocked BKH back a bit. Our president is in California today to address the current energy crisis but it is unlikely that he will announce any major policy change. This is good news for BKH, because it is unlikely that the Federal government will attempt to initiate price controls over skyrocketing electricity costs. BKH is having a record year for profits because of the surging demand for electricity. BKH tested the important support provided by the 10-DMA of $56.41 today. New positions should probably be avoided if this support fails tomorrow. That said, a rally that drives the stock to take out the resistance provided by the 52-week high of $58.50 might encourage new investors to drive the stock even higher, especially if a move into new high ground is accompanied by volume over 175,000 shares.

Picked on May 20th @ $55.94
Change since picked +1.02
Stop Loss @ $52.25

May 27, 2001

Profit taking extended to the very strong utility sector on Friday and BKH pulled back a bit with the rest of the group. Nevertheless, BKH did enjoy a solid week and could easily continue its rally this coming week as we approach the peak electricity usage months of summer. Most analysts believe that 2001 is going to be a record year for BKH. Consensus estimates are calling for the company to post profits of $3.42 when the fiscal year ends in December. Therefore, BKH is only trading with a forward P/E of 16.7, which offers investors a relatively good value for their capital. BKH struggled to move above its recently established high of $58.50 during the last two trading sessions. If this resistance can be broken this week, BKH could make another nice move. Therefore, traders might want to go long if BKH trades through $58.50 with midday volume exceeding 90,000 shares. Be careful if BKH gaps up to $59.25 or higher on the open because the stock could pullback and reward patient investors with a better entry price. In the event of a pullback, BKH may find initial support at the 10-DMA of $55.81. The MACD is solid and rising, which suggests that there could be some more upside potential left in this stock. The RSI continues to suggest an overbought condition but this condition is not as severe as it had been last week.

Picked on May 20th @ $55.94
Change since picked +1.33
Stop Loss @ $52.25